BMW announced yesterday that it is abandoning its costly Formula One racing effort at the end of this season. The move follows Honda’s withdrawal from the ultra-expensive and controversial sport last year, which is increasingly being criticized for its lack of social consciousness as the Great Recession drags on, and environmental issues pervade the industry.

“Of course, this was a difficult decision for us. But it’s a resolute step in view of our company’s strategic realignment,” said Dr. Norbert Reithofer, Chairman of the Board of Management of BMW AG. “Premium will increasingly be defined in terms of sustainability and environmental compatibility,” he said.

BMW is the largest luxury car maker in terms of sales in the world, and it has been hard hit by the global slump and demands from regulators that it clean up its gas guzzling vehicles. It is currently trying to cut costs by €6 billion, to stop an ocean of red ink. Its latest V-12 7-series emits more than twice the CO2 required under new European emissions rules. The company promises that a new CO2 Concept car will debut this fall at the Frankfurt Motor Show.

The money saved by cutting an F1 program, which can easily cost hundreds upon hundreds of millions of dollars will be invested in environmental technologies.

“As our company places stronger focus on sustainability initiatives, our participation in Formula One becomes less a key promoter of this engagement,” said Reithofer.

Reithofer said BMW will continue in other motorsports series that will enable BMW to transfer technology more directly and to realize additional synergies. “This is in our customers’ best interest,” he said.